Ten years ago, a potential home buyer could walk into a Countrywide office and get pre-approved for a half-million dollar home loan based on a bank statement written in crayon on a restaurant place mat and a pinky swear that the loan could be paid back. We all know too well the results of those lax standards, which is why regulators and banks ramped up restrictions on lending to the point where applying for a home loan is like auditioning for American Idol, without the washed-up celebrity appearances. But a new survey says that lenders are easing up… a bit. [More]
Homeowners whose property is worth more than what they owe have the option of using their equity to get a hold of more money. Home equity lines of credit can fund education expenses, home improvements or help you pay off debt with higher interest. The credit can be a lifesaver, but can also get users in trouble. [More]
Fearful that federal debt problems would leave it hanging, California has passed the hat around to eight banks and wound up with loans for $5.4 billion. The interest rate: an astoundingly low 0.237 percent. [More]
Illinois credit rating sucks, which is unfortunate for the Sucker State, because it needs to borrow millions of dollars to pay its bills. This means that the state is paying a premium for the loans, which are going to be used to improve roads, bridges and schools. As a product of Illinois’ public schools, I can honestly say that the $900 million in new bonds it is issuing will not be enough. Whether this is because we are too poorly educated to figure out how much money is actually needed, or because it really isn’t, no one can say. [More]
Private loans are the worst type of student debt, but the best place to get them may be your local credit union. Like most credit union products, their loans are usually a better deal with more favorable terms than similar loans from bigger banks.
It’s a good week for consumer protection against abusive credit card practices. Yesterday, the House Financial Services Committee approved the Credit Cardholders’ Bill of Rights, and this afternoon President Obama is meeting with officials from 14 credit card companies to tell them “that greater consumer protections are coming for their customers, with or without their cooperation.”
Mortgage rates are at a record low of 4.78%, according to Freddie Mac. [Bloomberg]
It’s a tough economic climate to be graduating from school — and maybe an even tougher one for those of you trying to get financial aid. We’ve put together a list of some financial aid and student lending resources to help make things easier.
You’re fired! Now what? It’s the nightmare scenario, and you can prepare for it by conducting a financial drill. Take a moment and pretend you have no income. Ask how you would pay pay for rent and food, and what lifestyle changes you could make on two week’s notice. To guide your planning, the New York Times has a few unorthodox and downright scary suggestions that are worth considering in a worst case scenario.
Consumer spending is down and credit card defaults are up!
You surely already know better, because you’re a loyal Consumerist reader, but stay far, far away from the form of legalized usury known as car title loans! CNN has published an overview of the industry, noting that APRs frequently exceed 200%, and that added fees and loan “rollover” options help keep borrowers in a cycle of debt.
The House of Representatives passed legislation that’s commonly known as the Credit Cardholders’ Bill of Rights today, but the bill is expected to be ignored by the Senate while they work on that whole $700 billion bailout thing.
Even people who are financially well off can be at risk of slipping into debt, especially in a staggering economy. There are plenty of doctors, lawyers and stock brokers who are currently on debt-management plans, according to David Jones, president of the Association of Independent Consumer Credit Counseling Agencies. Some of the warning signs of excess debt include: relying on home-equity credit lines or credit cards for everyday purchases, making only minimum payments on extended lines of credit and taking cash advances from one source of credit to pay another. To help save you from a downward-spiral into debt, Consumer Reports has put together a handy list of rules for smart borrowing. Here’s one of our favorites…
Prospective home buyers may need to pony up more cash up front to secure a mortgage if they are looking to buy in one of hundreds of zip codes that lenders now consider “soft markets.” Countrywide and GMAC recently ranked over 1,000 zip codes on a risk scale of 1-5. Lenders to moderate risk zip codes, ranked 1-3, may require borrowers to pay an additional 5% down payment. Unlucky buyers in high risk zip codes, ranked 4 or 5, are now automatically required to put down the extra 5%.
Elizabeth Warren of Harvard Law, our very favorite consumer debt expert, gave an interview to Marketplace this morning in which she talked about the rising cost of so-called “fixed expenses” and their affect on the American consumer.
Harvard Professor Elizabeth Warren has spent a career looking at personal debt. I asked her if consumers can sustain the engine of our economy much longer.
For years homeowners have been using their soaring-in-value homes as ATMs, drawing money out to finance whatever they wanted. No more. Falling home prices mean that your house is no longer a source of cash.
Massachusetts Attorney General Martha Coakley last week unveiled aggressive regulations designed to curb the orgy of irresponsible lending that led to the subprime meltdown. The measures, among the strictest in the nation, enjoin lenders from profiteering or ignoring a prospective borrower’s financial situation.
VirginMoneyUSA, which launches today, is a lending service designed to manage personal loans between friends and family, by taking care of documentation, repayment schedules, and reminders. At first glance, the service sounds like an intrusive middle-man; however, anyone who’s ever been on either side of a personal loan knows how delicate the situation can be, so we can understand the appeal of putting some distance between the personal relationship and the fiscal one.